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After two years of restructuring, integration and “taking pain” while realigning itself to deliver improvements, JSE-listed Torre Industries is optimistic about the future as the group starts to show signs of recovery.

The industrial group on Wednesday posted stronger improvements in the second half of the financial year ended June 30, after wrapping up the restructuring programme in the first half of the year.

“Our stronger balance sheet, improved and better integrated group and a clear strategic outlook provide us with a solid platform from which to deliver growth in the medium term,” he said.

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Appointed in July, Hillary was tasked with working with the executive team to build the group, with a specific focus on strategic growth initiatives.

Torre’s one-off asset impairments during the year under review had reduced the on-balance sheet capital; however, it is now “soundly based on productive assets”, with a reduced exposure to capital equipment.

Macroeconomic challenges had led to the R456-million impairment of assets during the year to June 30, mostly including goodwill, rental assets and property, plant and equipment, to more accurately reflect the net asset value of the businesses.

However, Torre has no net debt and has a material vendor receivable owing from the sale of Kanu Equipment earlier this year, which will further enhance group liquidity.

In May, Torre sold its 55% stake in Kanu to private equity fund African Agriculture Fund for around R360-million, as well as the operating division Reng/GoPro, in March, for R29-million.

“We have a very clear, concise strategy,” Hillary said, adding, however, that there was a need to batten down the hatches in the tough trading environment.

The group’s focus will now turn to right-sizing and eliminating excess costs where still required; diversifying its product offering through geographic expansion and reach; developing new and innovative ideas and leveraging technology to expand market share; and driving new partnerships and investments to achieve greater distribution ability.

The stronger balance sheet will be leveraged as a platform to diversify and strengthen the business going forward, particularly through acquisitions.

Torre is currently reviewing and assessing a number of potential focused bolt-on and standalone acquisitions.

Attached to these activities are key financial strategic initiatives, including continued optimisation of cost structures, a drive towards a fully decentralised operating model, a focus on stabilised earnings to reflect operational performance by limiting normalised adjustments, and focus on capital allocation for organic and inorganic growth, besides others, said Torre CFO Shivan Mansingh.

Meanwhile, no further restructuring costs or asset impairments are expected in the year ahead.

FINANCIAL RESULTS
After the restructuring and a resultant disappointing first half of the year, the group started delivering improved results in the second half of the financial year, despite the challenging trading conditions in most of Torre’s operating markets.

“The marked improvement in the second half, which was also stronger compared with the second half of the 2016 financial year, resulted mainly from an increase in operational efficiencies,” Mansingh pointed out.

Torre, which ended the year under review in a net R24-million cash positive position, posted a 20% increase in operating profit to R77-million as a result of the improved cost control and operational efficiencies, which had been offset by significant restructuring costs incurred in the first half of the financial year.

Gross profit for the 12 months to June 30 was up 8% to R568-million, while normalised earnings before interest, taxes, depreciation and amortisation remained stable at R121-million.

The group’s normalised headline earnings per share (HEPS) dropped by 30% to 15.01c, while normalised HEPS from continuing operations increased by 3% to 8.19c.

Revenue for the year under review also remained stable at R1.5-billion.

Torre declared a final dividend of 3c a share, a 45% decrease on the prior year.

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